the last major tax reform was passed more than 30 years ago in 1986 with a large bipartisan majority. that sounds so nice. wouldn't that be nice? come on, we have some money right here. raise your hands, folks. the 1986 tax bill substantially reduced our business tax rate to make america globally competitive, went through the roof. the plan worked. jobs and industry boomed. other countries saw our success and copy our playbook. foreign competitors adopted tax rates much lower and more competitive than our own. when it comes to business tax, we are now dead last among developed nations. we pay the highest tax of any

nation in the world. our rate is the least competitive rate there is. our business tax rate is 60% higher than our average economic competitor. think of that. then he said, how do we compete? in many cases, you don't. our companies leave to go to other countries. it is a massive tax on every product made in america, giving countries like germany, canada, japan, mexico, and not to mention some of the others, a massive head start over american industry. it is time to go from dead last to pretty much the front of the pack. [applause] president trump: pretty much.

lowest, but we will be getting pretty close. under our framework, we will dramatically cut the business tax rate so american companies and workers can beat our foreign competitors. [applause] president trump: we will cut the business tax rate from 35% of way down to 20% below our average competition by far. change,a revolutionary and the biggest winners will be every day working families as jobs start pouring into our country. [applause] trump: one companies leave our shores, it is american workers who get her. -- hurt. they get fired. when companies stay in america

in higher in america -- hire america, it is our american workers who reap the rewards. cap your tax rate at a present, of, unlike 25%. that is your maximum rate. [applause] trump: this will be he lowest top marginal tax rate for businesses in more than 80 years. the lowest in 80 years. [applause] president trump: it will be rocket fuel for our economy. to further help our companies compete, for the next five years our framework will allow you to fully write off the cost of new

equipment in the year you buy it. think of that one. to me that is so big. [applause] president trump: so you don't take it over many years. you take it immediately when you buy. that will be something people have never seen before. it will be great. it will be truly great. that means more production, more investment, and far more jobs. productst to make more and say made in america because that's what we want, made in the usa or made in america, then we have to reduce [applause] taxes on the businesses that produce in america -- have to reduce taxes on the businesses that produce america. fourth and finally, our framework, and you have to

remember you see what is happening with companies and offshore, encourages american companies to bring back trillions of dollars of wealth parked overseas. our current tax code actually punishes companies for keeping their headquarters in america and discourages them from bringing back the profits they earn overseas. we are going to reverse that. right now we have at least $3 trillion overseas, and i must tell you i have been following this for six years, and republicans and democrats have always said we want that money to come back, so they all agreed, and they still never got it done. we are going to bring everyone together and get that done. [applause] president trump: we will

eliminate the penalty on bringing back the future earnings and bringing them back to the united states in full. we will impose a one-time low tax on money currently parked overseas so it can be brought back home to america where it belongs. for too long, our tax code has incentivized companies to leave our country in search of lower tax rates. my richest -- might ministrations rejects the offshore and model and embraces a new model, the american model. we want companies to hire and grow in america and to help rebuild american cities and towns. when we grow american manufacturing, we don't only grow our jobs and wages, but we also grow america's spirit. when we purchase products made in america, fashioned by our

fellow citizens, we renew the bond of national loyalty that all us all -- link us together as one. there is a great patriotism in the men and women who leave their hearts on the factory floor, who pour their hopes in iron and steel, who turn their own dreams into reality with their own two hands. when they huddle at the day groom -- breakroom, or at the end of a long shift, they take pride in knowing that the products they make are not just building businesses, they are building families and communities, and most of all they are building this nation that we all love so much. [applause]

comment we want every american to know the dignity of work, the pride, the pride, the beautiful pride, getting a paycheck, the satisfaction of being told that was a job well done. we want every parent to be able to care for their children and every child to know a home filled with love and a community pe.led with ho that is the america we see when we look at the american flag that hangs over our factories, sales over our towns and fields. we love our flag. [applause] president trump: the soul of a

country is found in the people who make it home. we a lift to our citizens to provide them with the future of earntunity where they can a living with dignity and purpose and pride. future build this featur together as one team, one people, and one great american family. this can be remembered as the moment we took control of our guests and see -- destiny. with your help and your voice, we will bring back our jobs. we will bring back our wealth, and for every citizen across this land, we will bring back our great american dream. thank you. god bless you. god bless america. thank you very much, everybody. [applause] ♪

vonnie: you have been listening to the president of the united hises, donald trump, and speech to the national association of manufacturers. the ceo of the organization introduced potus earlier, saying they were enthusiastic about momentum behind tax reform in particular and encouraged members to support. you can see members behind the president on stage in the 250arin oriental, about small, medium, and large manufacturers. president trump calling for a new tax code, saying america will go from dead last two pretty much first on tax. let's bring in michael mckee in studio and at the event in washington kevin cirilli. there is still lots of applause, so i will turn to michael mckee

in studio. obviously, he had all the right buttons with manufacturers, but is this a win, win, win with manufacturers? michael: it can be because perhaps they will pay lower taxes, and they will like that. the real question is what does it do for the economy and the working man. much of what he said was over signification, exaggeration, or wrong on the impact it would have on the taxco. he is trying to sell a political document rather than an actual -- on the tax code. he is trying to sell a political document rather than an actual bill. the issue of small companies, id by theem are pa individual taxpayer in the upper 1%. 30% are people who make less than that, and a lot of those people are not paying the top

rate anyway, so it is not going to have a huge effect he is talking about in terms of job generation and growth. same thing with lowering corporate tax rates. yes, 35% is one of the highest in the world, however the effective rate is between 18% and 21% depending on the study you look at. in some ways, you could argue some of these companies will pay a little more. caphe other side, small companies could do better under a lower tax rate. the idea of immediate expensing could have an immediate effect, pulling for some investment in companies creating additional plans and hiring more people. vonnie: kevin cirilli in washington, we hear there are about 250 people in the audience reacting, obviously a little biased in that crowd because everything would have sounded good to them.

does this have momentum beyond the 250 people in that hall? kevin: this is music to the ears of the manufacturing industry here in d.c. a couple things michael mckee said, the president is trying to rally the political troops, calling it rocket fuel for the economy, and did try while making the pitch to the manufacturers also try to pitch to middle americans, saying they would benefit from the economic growth. meanwhile, while the president was speaking, senate republicans unveiled their 2018 fiscal budget. this will be the vehicle that will allow them to accomplish tax reform by the end of the year, and it will also allow them to have a much narrower attack on the affordable care act and open up some arctic drilling. things moving along as planned

and on schedule as the president and steven mnuchin had hoped by the end of the year, and there's cautious optimism among the industry that they will get something accomplished. vonnie: november 13 would be the deadline for me to come out of the senate. we will see if it happens. the president said how do you compete, in many cases you don't, they go to other countries. it is not really small and medium-sized businesses that moved to other countries. will this make a difference? michael: we are talking about two different things, companies that move their operations because they will be cheaper in other nations on a labor basis, and companies that will invert, moving headquarters on tax basis. some of them you might be familiar with. we are not talking about the scottish. in version is a change of post office address.

their jobs, but they pay lower taxes overall. you can argue it is not a good thing to have these companies incorporating overseas, but it is not really a jobs or economy issue, but it is a loss of revenue to the government. the cost of doing business is a whole other conversation that gets into other issues in terms of trade and u.s. competitiveness in general. vonnie: michael mckee and kevin cirilli in washington, d.c. we have more breaking news, this time on equifax. the stock is down about 0.2%. hasboard of directors formed a special committee to review the sale of stock that was made by executives days after the hack. we will continue to follow this story.

bloomberg real yield. >> i don't think it is just fixed income. we are in the equity market as well. 10 years ago, you want to be conservative, you can cash and still receive five to 10%. around the world, if you are going to own fixed income assets, you will own something that is below your long-term retirement goal. we do see a demand for high-quality assets, but that is because you have an improving economic environment that is being going by fiscal and monetary stimulus around the world. folio still looks good. tom: you are all sort of of the same idea that i don't want to lose money. findt to make a coupon and total return. high-yield is making a run.

are you on moderately speaking terms with your corporate desk at goldman sachs, or are you high-yield all the time? are cautious on high-yield right now. we think valuations are pretty tight given there are increasing pockets of risk in the market and the view that as financial conditions tightening in 2018, you'll see a steepening of the quality curve. tom: this is important. put your hands up like this to describe it. full faith and credit down here, this is their yield. you are watching high-yield coming in, tight. what happens to high-yield if janet yellen's inflation becomes less and transitory? how does that work? rachel: historically high-yield has had an inverse relationship with treasuries. the economy has already been strong, and spreads are tight,

so there is not a lot of room for spreads to go. tothink they are going tighten financial conditions, so spreads are likely to leak wider . tom: i know everybody at pimco eats kale and you haven't been to mcdonald's in three years, help me. blue-chip corporate like mcdonald's comes down, how does that deal get done? how do you get the paper you want? ini have not eaten fast food 10 years, so probably not be biggest mcdonald's fan out there. obviously, investors are out there competing for supply. financial conditions are so easy, so many of these corporate bond deals are being met with incredibly strong demand, two or three or four times

oversubscribed. we are being a lot more selective. we talked about high-yield earlier. we have reduce risk in high-yield. we are being more selective. we are owning more senior parts of the capital structure. we are not buying as many new issues as we were six months ago. we like the u.s. housing market. also emerging markets on a relative basis to us look quite attractive. tom: let's continue with this discussion. we will call on rachel golder, jim keenan, and marc kie sel. still ahead, the final spread. it features in the united kingdom, they are arguing. jobs report in the united states. that will be a big deal as we moved to that december fed meeting. stay with us. ♪

♪ i am tom keene in for jonathan ferro. this is "bloomberg real yield." time for the final spread. week, up over the next janet yellen will be speaking, very important speech, in barcelona the regional a vote.nt holds and prime minister may headlines conservative confidence. and we look forward to the friday jobs for as well. i want to go deeper, or as deep as i can with my brain. jim keenan of blackrock, rachel golder of goldman sachs, and esel at pimco.

rachel, bloomberg had a great article on the frenzy in your world of loans. describe how institutions by loans. -- buy loans. loans are seen as a higher-quality opportunity set, a safer way of getting yield. there has been a massive issuance in the last few years, but most of it has been refinancing, a lot of it absorbed by clo's. ferro would not have done that, what is clo? collateralized loan obligations. the bank loans have a floating rate. tom: we have jim keenan. explain floating-rate versus fixed-rate, and why you need to 2018?ow as you go into jim: it is around the duration

risk. fixed income has a variability of rate risk associated with it. bank runs give you credit risk that are tagged to the front end relative to what you would get in fixed income. the bank loans, the secured market is giving you a good return profile. what we talked about before is the volatility has been low. whether you are looking at loans are high-yield or emerging markets, the underlying economy at low growth, there is still huge divergence between winners and losers. that is important in having a balanced credit portfolio. tom: what is important here is the exogenous shock. be exogenous to

the certitude of the market? i think they can. i think under bernanke and yellen we have had a robust environment. bonds and equities have done well. the challenges because the global economy is doing decently and because it is likely you will see inflation in developed markets gradually pick up, the ability of central banks to provide that tailwind for financial markets, i don't think it is going to be as robust as it has in the past. that is independent of the new chair. the new chair is going to create a potential volatility for markets. i think it is something that is going to be a headwind for asset prices. you jim, i want to go to with the last question. the not sophisticated out there say, yield higher, price lower. is anyone looking for an almost bear market in bonds?

jim: i'm sure there are some people looking out there. we are all getting used to the sense that there is a lot of debt in the system. it is just that the corporate level, the central bank is starting to remove that from the system. couple that with technology, demographics, i think there is a larger trend of downward growth. tom: this has been to sophisticated for surveillance. jonathan ferro looking to do this each and every week. my guests, jim keenan, rachel golder, and mark kiesel. at 1:00 p.m. in new york, we will have next was of interview. ♪

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>> from bloomberg world headquarters in new york, here are the top stories on the bloomberg and around the world. president donald trump holding an eyebrow raising meeting with steven mnuchin and hoover institution's fellow kevin wash. what they discussed, what other meetings might happen, and what it might mean for the future of the left central bank. out with the old, in with the new. we are wrapping up the third quarter, looking ahead to the forth bridge have a current debate of tax reform is impacting. a new mold by fitch ratings and whether the ceo can win back market share after last year's block. >> let's get